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Mergers and acquisitions bid premiums have hit a six-year high, despite deal volumes almost halving compared to the same time last year.

The average premium paid by strategic buyers and financial sponsors stands at 25% for the first five months of the year, compared to an average last year of less than 20%, according to Thomson Reuters.

The last time strategic buyer bid premiums stood at 25% was in 2002, having hit a high of 35% back in 1999.

Financial sponsor bid premiums last exceeded 25% in 2003, but were at their highest eight years ago at close to 40%.

Mergers and acquisition volume this year has so far totalled $1.2 trillion (€773m), down 45.5% compared to the same point last year. About $4.5 trillion of deals were announced last year, the highest annual total on record, however deal premiums remained muted.

The high premiums so far this year come despite the expectation that price earning ratios are set to fall to their lowest level in a decade, which is predicted to lead to a rise in deal volumes.

Speaking to Bloomberg yesterday, Merrill Lynch’s president Greg Fleming said he expected a “significant pickup” in M&A volumes in the financial sector this year, comparing the current market to that after the 1980s savings and loans crisis in the US.